Wellington City Quarterly economic monitor - September 2019

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Overview

Indicator Wellington City Wellington Region New Zealand
Annual average % change
Gross domestic product
2.7%
2.4%
2.4%
Traffic flow
0.7%
1.4%
1.3%
Health Enrolments
2.7%
2.2%
2.0%
Consumer spending
3.1%
4.1%
3.4%
Residential consents
13.2%
11.3%
12.0%
Non-residential consents
24.4%
30.0%
12.7%
House prices*
2.8%
7.8%
1.9%
House sales
-1.2%
-0.2%
-0.7%
Guest nights
3.3%
3.2%
1.2%
Tourism expenditure
8.1%
6.8%
3.1%
Car registrations
-8.4%
-9.4%
-8.5%
Commercial vehicle registrations
-1.0%
-4.9%
-1.6%
Jobseeker Support recipients
4.1%
4.3%
10.3%
Level
Unemployment rate
3.5%
3.6%
4.2%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Wellington City

Wellington City’s economic performance continues to broadly reflect national trends with Infometrics’ provisional GDP estimate growing 2.7% in the September 2019 year next to a national and regional average of 2.4%.

Electronic card spending on retail purchases grew 3.1% in the September 2019 year. Nationally, consumers remain optimistic about the economy but are becoming increasingly cautious in their outlook. This caution is evident in consumers unwillingness to make major purchases with car registrations in Wellington city falling 8.4% in the September 2019 year.

Non-residential consents in Wellington City rose 24% in the September 2019 year following a particularly strong June 2019 quarter. Residential consents grew 13% in the September 2019 year, as the housing market responds to continued population growth.

Wellington City’s population has been growing slower than previously estimated. Following the release of the 2018 census, StatsNZ has revised the district’s 2018 population to 209,000 from the previous estimate of 216,300. However, by June 2019 StatsNZ estimate that the district’s population had increased 0.7% to reach 210,400.

Guest nights in Wellington city grew 3.3% in the September 2019 year which is flowing into greater spending by tourists which increased 8.1% to an unprecedented $1,961 in the September 2019 year.

House prices in Wellington City rose 2.8% in September 2019, in line with 1.9% growth nationally. House sales have settled at around 3,000 per annum since 2017. We expect that low interest rates, the scrapping of the capital gains tax proposal, and the loosening of loan to value ratio restrictions, with the potential for more to come, will boost the housing market going into 2020.

Wellington City’s unemployment rate fell to 3.5% in the September 2019 year as the national unemployment rate rose to 4.2%. However, the number of Jobseeker Support Recipients in Wellington City rose 4.1% in the September 2019 year and have been increasing steadily since late 2017.

Overview of national economy

Warning signs continue to appear for the direction of the New Zealand economy over the next few years, even as current activity remains solid. There is a growing divide between current activity and the outlook for the future, with global and domestic uncertainty at odds with current demand-led growth. There are both upside and downside risks to the future direction of travel, although on balance a deteriorating economic outlook is more likely. An expected pick-up in the housing market over 2020 has the potential to draw the economy out of the doldrums, but continued slower global economic growth, low domestic investment, and slowing spending growth could tip the economy in the other direction.